How to build a corporate GHG inventory: Scope 1 and Scope 2 under the GHG Protocol

A greenhouse gas inventory is the foundation of every climate disclosure, target and reduction plan. If the inventory is wrong, everything built on it is wrong. This guide explains how to build a Scope 1 and Scope 2 inventory that is complete, consistent and ready for verification.

Start with the boundaries

The GHG Protocol Corporate Standard asks two boundary questions.

The organizational boundary decides which entities and facilities are included. There are three approaches. Under the equity share approach, you account for emissions in proportion to your ownership. Under the financial control approach, you account for 100 percent of emissions from operations whose financial and operating policies you direct. Under the operational control approach, you account for 100 percent of emissions from operations where you have authority to introduce and implement operating policies. Choose one approach and apply it consistently across the group.

The operational boundary decides which emission sources are included and how they are classified into Scope 1, Scope 2 and Scope 3.

Identify Scope 1 sources

Scope 1 covers direct emissions from sources you own or control. In industrial companies they usually fall into four groups:

• Stationary combustion: fuels burned in boilers, furnaces, kilns, dryers and generators.
• Mobile combustion: fuels used in company-owned or controlled vehicles and mobile equipment.
• Process emissions: emissions released by chemical reactions, such as the calcination of limestone in cement production or the use of carbon as a reducing agent in steelmaking.
• Fugitive emissions: leaks of refrigerants from air conditioning and refrigeration, methane from gas systems, and similar releases.

The GHG Protocol covers seven gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulphur hexafluoride and nitrogen trifluoride. Each is converted to carbon dioxide equivalent using global warming potentials from the IPCC assessment reports. State which assessment report you use.

Scope 2: location-based and market-based

Scope 2 covers emissions from the generation of purchased electricity, steam, heat and cooling. The GHG Protocol Scope 2 Guidance requires dual reporting.

The location-based method uses average emission factors for the grids where consumption occurs. It reflects the physical reality of the grid.

The market-based method uses emission factors from contractual instruments the company has chosen: supplier-specific emission rates, power purchase agreements, green tariffs and energy attribute certificates such as I-RECs or guarantees of origin. Where no instrument exists, a residual mix factor is used if available. The market-based figure shows the effect of procurement choices, such as buying renewable electricity.

The GHG Protocol is revising its Scope 2 Guidance. Its public consultation closed in January 2026, and the proposals include hourly matching of electricity use with clean generation, which drew strong debate. No final text has been published, so the current guidance still applies, but companies should watch the outcome before signing long-term power contracts.

Collect activity data and choose emission factors

Activity data is the measured quantity behind each emission: litres of diesel, cubic metres of natural gas, tonnes of coal, kilowatt-hours of electricity, kilograms of refrigerant topped up. Use the most direct source available, such as meter readings and fuel invoices, rather than estimates.

Emission factors convert activity data into emissions. Use recognized sources and document them: national inventories, the IPCC guidelines, government conversion factors, or plant-specific factors where you measure fuel carbon content. For electricity, use the most recent factor published for your grid. Record the source, year and version of every factor.

Base year and recalculation

Choose a base year with reliable data, against which you will track progress and set targets. Define a recalculation policy: the base year should be recalculated when structural changes, such as acquisitions, divestments or changes in calculation methodology, change total emissions by more than a set threshold. Without this policy, an acquisition can look like an emissions increase and a divestment like a reduction.

Controls and verification

A credible inventory has controls similar to financial data:

• Clear ownership for each source and site.
• Evidence attached to every data point.
• Review and approval before consolidation.
• Checks for anomalies, such as month-on-month jumps or intensity outliers.
• A documented methodology that someone new could follow.

These controls make third-party verification, for example to ISO 14064-3, faster and less costly. They also make the data good enough to manage with, which is the point of measuring it.

From annual inventory to continuous measurement

Many companies still compile their inventory once a year from spreadsheets. That works for disclosure but not for management. When emissions data is collected monthly, or connected directly to plant systems, teams can see the effect of operational changes while there is still time to act.

NCV builds GHG inventories to the GHG Protocol and ISO 14064, and prepares them for verification. SustainOS calculates Scope 1 and Scope 2 emissions automatically from activity data, keeps factors and evidence documented, and connects to meters and plant systems so the inventory becomes a live management tool.